if you haven't picked it up already, i highly recommend Mike Cohn's Agile estimating and planning

I'm in the middle of it but i particularly loved the discussion between why to use story points over 'ideal days'. For those of you not familiar with a story point it's an estimation of value in relation to other estimates of value or saying "that's about a 5" to a middle sized story or "that's a 1" to the smallest story you have then relating all other stories to that one based on their difficulty,risk, and or size.

Mike's example was using dogs but i'll use vehicles because i'm a car buff. Say you have the following 'car points' you can assign to cars based on their size, what would you assign these cars:

1. 2007 Mitsubishi Eclipse
2. 1994 300zx Twin Turbo
3. 2006 Hummer H2
4. Mack Truck
5. 1971 Pontiac LeMans Convertible
6. 2001 Honda Shadow 750
7. 2007 Mini Cooper Turbo
8. School Bus

ok, think about those and how you'd order them based on "relative size" to one another.

-- here's my list

1 - 2001 Honda Shadow 750
3 - 2007 Mini Cooper Turbo
5 - 2007 Mitsubishi Eclipse
6 - 1994 300zx Twin Turbo
8 -1971 Pontiac LeMans Convertible
15 - Hummer H2
20 - School Bus
40 - Mack Truck

I figured a mini cooper is about 3x bigger than a motorcycle, an eclipse is a little less than twice as big as a mini, so on... and i assumed the mack truck had a trailer and therefore was twice as big as a school bus (full size not the short-bus that i rode to school  :)  )

Anyhow, the benefits of estimating based on relative size (according to mike) are that

1. Story points help drive cross-functional behavior (people don't say things like "well my part will take x ideal days, what about your part" and then add them)

2.  Story point estimates do not decay (as i get better at something my story points still mean the same thing in relation to other estimated stories)

3.  Story points are a pure measure of size, it's easier to estimate by comparing other things than a fixed time

4.  Estimating in story points is typically faster (people don't go thinking about things like individual tasks that make up the story etc)

5.  My ideal days are not your ideal days (i run the mile in 7minutes, my healthy athletic pal runs it in 5... we're going to estimate the same task with different ideal days)